Vanguard vs AJ Bell: what’s the difference?

What is the difference between Vanguard and AJ Bell?

When choosing between AJ Bell and Vanguard, it’s important to understand their philosophies, focus areas, and unique offerings.

Vanguard is renowned for its commitment to low-cost, passive investing, but its fees will change from 31 January 2025.

The platform focuses a lot on in-house index funds and ETFs, designed to help investors achieve steady, long-term returns without high costs, although it also offers some active funds. 

Its UK platform offers simplicity, making it ideal for passive investors. Vanguard’s customer service is efficient but leans heavily on online tools and digital platforms, offering limited direct interaction.

Vanguard has a global presence particularly strong in the US and UK, and it prioritises its flagship index funds.

AJ Bell, by contrast, is UK-based and caters to active and passive investors. It provides a broader investment range, including third-party funds, ETFs, shares, investment trusts, and bonds. With intuitive features and tools, AJ Bell’s platform may appeal to a wider audience.

AJ Bell’s beginner-friendly app, Dodl, simplifies the investment process for newer investors, while its core platform offers advanced tools for experienced traders. AJ Bell's service includes accessible customer support.

When it comes to funds, Vanguard UK focuses more on its own funds and ETFs—about 85 in total. AJ Bell, on the other hand, offers access to over 2,000 funds, as well as ETFs and shares, making it a more comprehensive platform for those seeking variety.

Vanguard vs AJ Bell: how do the fees compare?

Fees often play a major role when choosing an investment platform. We compare AJ Bell and Vanguard’s charges.  

Vanguard’s fees

Vanguard’s fees are currently among the lowest in the market, but this will change from 31 January 2025. At the time of writing, Vanguard charges a platform fee of 0.15% annually, capped at £375 a year for accounts of over £250,000 and an average ongoing annual cost of 0.2%. 

For example, if you invested £5,000 in a Vanguard fund, the platform fee would amount to £7.50 per year, with additional ongoing costs of £10 per year.

However, from 31 January 2025, there will be a £4 per month minimum account fee for balances of under £32,000, except for junior individual savings accounts (ISAs), managed ISAs and managed pensions. The managed ISA fee will fall from 0.3% to 0.2%. 

On its site, Vanguard gives an example of how the new fees would stack up. So, if you invested £5,000 in a LifeStrategy fund, you would pay £48 per year for the monthly fee plus around £13 a year for the fund management cost (0.26%). 

For those with balances of over £32,000, the £4 management fee won’t apply - they’ll still have the 0.15% a year fee, capped at £375. 

There’s no charge for buying or selling Vanguard funds on its platform. However, other fees, such as trading commissions for shares, may apply. Vanguard’s minimum investment requirement is £500 for lump sums or £100 for monthly contributions.

AJ Bell’s fees

AJ Bell fees are structured on a tiered basis. For investments up to £250,000, the platform fee is 0.25% annually (a maximum of £3.50 a month).

With funds account charges, it’s 0.25% for the first £250,000, 0.1% for £250,000-£500,000 and no charge for over this amount. 

For a £5,000 investment, this equates to £12.50 annually. AJ Bell also charges trading commissions of £5 per trade, reduced to £3.50 for frequent traders who had 10 or more share deals in the previous month. 

Unlike Vanguard, AJ Bell has no minimum investment requirement, which makes it more accessible for new investors. However, additional fees can add up for more active investors.

Vanguard’s new fee in 2025 will make it much more expensive for investors with smaller balances or those new to investing, and other platforms, including AJ Bell, will be cheaper. 

Is Vanguard or AJ Bell better?

When determining who is better between Vanguard and AJ Bell, also consider the following:

Range of investments

AJ Bell offers a significantly broader investment range, with access to over 2,000 funds, as well as ETFs, shares, and bonds. This makes it ideal for active investors looking for variety.

Vanguard’s own range of funds is more focused, with around 85 funds and ETFs. While the selection is smaller, it’s tailored to passive investors who value simplicity.

Research and guidance

AJ Bell's service provides robust research tools, including fee calculators, comparison tools, and in-depth market analysis. These resources empower investors to make informed decisions.

Vanguard’s platform offers more limited tools, including calculators and basic guides, but this simplicity aligns with its passive investment focus.

Brand reputation

Vanguard is a global leader in passive investing and is trusted for its investor-first approach. It built its reputation on low-cost index funds and long-term financial growth.

AJ Bell is highly regarded in the UK for its flexible platform and extensive investment options. The platform’s innovative Dodl app further enhances its accessibility, particularly for beginners.

Can you open accounts with both Vanguard and AJ Bell?

Yes, you can open accounts with both providers. This strategy can benefit investors who want to combine Vanguard’s passive funds with AJ Bell’s wider investment range and tools.

However, holding accounts with both providers means managing multiple platforms, which can involve higher fees and additional administrative work.

You should also ensure you understand any tax implications, so it’s worth considering expert financial advice. 

How do their investment philosophies differ?

AJ Bell’s philosophy

AJ Bell’s philosophy revolves around providing flexibility and choice to investors. The platform caters to a range of investors by offering an extensive selection of funds, shares, and other investment products.

Its tools and guidance aim to simplify investing and empower individuals to make informed decisions.

Vanguard’s philosophy

Vanguard’s philosophy is built on a commitment to low-cost investing and long-term growth. The company emphasises passive investments to help investors achieve steady returns without incurring excessive fees.

However, Vanguard’s new fees may lessen its appeal as a low-cost investment platform. 

Get expert financial advice

Choosing between Vanguard and AJ Bell ultimately depends on your investment style and priorities, as well as your investment balance, as this could impact the fees you pay.

Combining the strengths of both platforms can be a smart strategy for those looking to diversify their approach while optimising costs and opportunities.

Let Unbiased match you with a professional financial adviser to help you build a tailored investment strategy and achieve your financial goals.